Can an Employer Have Both a Defined Benefit and a Defined Contribution Plan?

Absolutely.  In fact one way that we have found to be particularly advantageous is what is called a Floor Offset plan combination.

The employer sponsors both types of plans.  The defined contribution plan is typically a profit sharing plan and often includes 401(k) elective deferrals.  The defined benefit plan provides a minimum, or “floor” benefit for the two plans combined.  Each participant in both plans gets the greater of this minimum or whatever the account balance from employer contributions in the profit sharing plan will provide.  The benefit provided by the defined benefit plan is “offset” by the profit sharing account.  In many cases, the plans can be structured so that the entire benefit for everyone except the business owner is provided solely by the profit sharing plan and the defined benefit plan functions as a plan that benefits only the business owner.  In order to be able to function this way, there is a minimum level of employer contribution to the profit sharing plan (typically 5% to 7.5% of pay) and the plan must pass non-discrimination testing each year based on the demographics of plan participants.